The Dictatorship
How the government shutdown could impact the US economy
WASHINGTON (AP) — Shutdowns of the federal government usually don’t leave much economic damage. But the one that started Wednesday looks riskier, not least because President Donald Trump is threatening to use the standoff to permanently eliminate thousands of government jobs and the state of the economy is already precarious.
For now, financial markets are shrugging off the impasse as just the latest failure of Republicans and Democrats to agree on a budget and keep the government running.
“Everyone seems quite complacent about the shutdown, assuming the Democrats and Republicans will come to terms and life will go on, as has been the case in past shutdowns,” the independent economist Ed Yardeni wrote in a commentary Thursday. “History could certainly repeat, especially with a man known for dealmaking sitting in the Oval Office.’’
But given the chasm separating the two political parties, Yardeni added, “the lack of caution is somewhat surprising.’’
Speaker of the House Mike Johnson, R-La., and GOP leaders, from left, Rep. Lisa McClain, R-Mich., Majority Leader Steve Scalise, R-La., and Majority Whip Tom Emmer, R-Minn., blame the government shutdown on Democrats during a news conference at the Capitol in Washington, Thursday, Oct. 2, 2025. (AP Photo/J. Scott Applewhite)
Speaker of the House Mike Johnson, R-La., and GOP leaders, from left, Rep. Lisa McClain, R-Mich., Majority Leader Steve Scalise, R-La., and Majority Whip Tom Emmer, R-Minn., blame the government shutdown on Democrats during a news conference at the Capitol in Washington, Thursday, Oct. 2, 2025. (AP Photo/J. Scott Applewhite)
The U.S. government has now shut down 21 times in the past half century. The last of those shutdowns was the longest — stretching five weeks in December 2018 into January 2019 during Trump’s first term.
Even that one barely left a mark on the world’s biggest economy: The Congressional Budget Office estimates that it shaved just 0.02% off 2019 U.S. gross domestic product — the nation’s output of goods and services.
The economic impact of shutdowns is usually fleeting. Federal workers get furloughed and the federal government delays some spending while they last. When they’re over, federal workers go back to their jobs and collect back pay, and the government belatedly spends the money it had withheld. It’s pretty much a wash.
“Government shutdowns are inconvenient and messy,″ said Scott Helfstein, head of investment strategy at the investment firm Global X. ”But there is little evidence that they have a significant impact on the economy. Typically, the lost economic activity, if meaningful in the first place, is recovered in the following quarter.″
Government benefit payments that provide crucial income support for millions of Americans, such as Social Security, and health care programs such as Medicare, won’t be disrupted by the shutdown.
Data from previous shutdowns have shown little impact on U.S. GDP unless they are extended, according to CBO Director Phillip Swagel. “The impact is not immediate, but over time, there is a negative impact of a shutdown on the economy,” he recently told The Associated Press.
The damage could be worse this go-around.
John O’Hara works on the floor at the New York Stock Exchange in New York, Wednesday, Oct. 1, 2025. (AP Photo/Seth Wenig)
John O’Hara works on the floor at the New York Stock Exchange in New York, Wednesday, Oct. 1, 2025. (AP Photo/Seth Wenig)
First, some government agencies dodged the 2018-2019 shutdown because they’d received funding in advance and could just continue operating. That hasn’t happened this time: The CBO estimates that about 750,000 federal employees could be temporarily laid off.
Trump is also considering something more destructive: His budget office has threatened the mass firing of federal workers this time, not just putting them on temporary furlough.
A “reduction in force’’ would not only lay off employees but eliminate their positions, threatening more upheaval for a workforce that’s already been purged by Trump. “We’d be laying off a lot of people that are going to be very affected, and they’re Democrats. They’re going to be Democrats,” the president said Tuesday.
Thomas Ryan of Capital Economics wrote in a commentary that “it is reasonable to assume that (Trump’s mass layoff threat) is political bluster, aimed at pressuring Democrats to approve a funding extension without concessions.” But, he added, “if followed through, it could have longer-term consequences, prolonging government downsizing and keeping the sector as a drag on payrolls into next year.”
Ryan Sweet, chief U.S. economist at Oxford Economics, estimates that the shutdown and temporary loss of income for federal workers could shave 0.1 to 0.2 percentage points from the nation’s annual growth rate in the fourth quarter for each week the government is closed. Some of that will be recovered once it reopens.
“The economic costs of government shutdowns are normally minimal unless they last for several weeks,” Sweet wrote.
The shutdown also comes at a time when the job market is already under strain, damaged by the lingering effects of high interest rates and uncertainty around Trump’s erratic campaign to slap taxes on imports from almost every country on earth and on specific products — from copper to foreign films.
Financial information is displayed as traders work on the floor at the New York Stock Exchange in New York, Wednesday, Oct. 1, 2025. (AP Photo/Seth Wenig)
Financial information is displayed as traders work on the floor at the New York Stock Exchange in New York, Wednesday, Oct. 1, 2025. (AP Photo/Seth Wenig)
Labor Department revisions earlier this month showed that the economy created 911,000 fewer jobs than originally reported in the year that ended in March. That meant that employers added an average of fewer than 71,000 new jobs a month over that period, not the 147,000 first reported. Since March, job creation has slowed even more — to an average 53,000 a month. During the 2021-2023 hiring boom that followed COVID-19 lockdowns, by contrast, the economy was creating 400,000 jobs a month.
The September jobs report was supposed to come out Friday — forecasters had expected to see 50,000 new jobs last month — but has been delayed indefinitely by the shutdown.
The economy is sending mixed signals, however. GDP growth came in at a strong 3.8% annual pace from April through June, reversing a 0.6% drop in the first three months of the year. But it’s not yet clear if that solid growth can continue, or if it will spur a rebound in hiring.
“The economy is very much on a ‘knife’s edge,’” said Michael Linden, senior policy fellow at the left-leaning Washington Center for Equitable Growth. “The economic data is pointing in different directions right now. Second-quarter GDP growth was strong, but how much of that was merely a bounce back from incredibly weak first quarter GDP is hard to know. What we know for sure is that the economy is creating fewer jobs, wage growth is slowing, and middle-class consumers are feeling pinched.”
____
Associated Press Writer Fatima Hussein in Washington contributed to this story.
The Dictatorship
Labor Secretary Lori Chavez-DeRemer is leaving Trump’s Cabinet
WASHINGTON (AP) — Labor Secretary Lori Chavez-DeRemer is out of President Donald Trump’s Cabinet, the White House said Monday, after multiple allegations of abusing her position’s power, including having an affair with a subordinate and drinking alcohol on the job.
Chavez-DeRemer is the third Trump Cabinet member to leave her post after Trump fired his embattled Homeland Security Secretary Kristi Noem in March and ousted Attorney General Pam Bondi earlier this month.
In a statement posted on social media, Chavez-DeRemer praised Trump and wrote, “I am proud that we made significant progress in advancing President Trump’s mission to bridge the gap between business and labor and always put the American worker first.”
Unlike other recent Cabinet departures, Chavez-DeRemer’s exit was announced by a White House aide, not by the president on his social media account.
“Labor Secretary Lori Chavez-DeRemer will be leaving the Administration to take a position in the private sector,” White House communications director Steven Cheung said on the social media site X. “She has done a phenomenal job in her role by protecting American workers, enacting fair labor practices, and helping Americans gain additional skills to improve their lives.”
He said Keith Sonderling, the current deputy labor secretary, would become acting labor secretary in her place. The news outlet NOTUS was the first to report Chavez-DeRemer’s resignation.
Labor chief, family members faced multiple allegations
Chavez-DeRemer’s departure follows reports that began surfacing in January that she was under a series of investigations.
A New York Times report last Wednesday revealed that the Labor Department’s inspector general was reviewing material showing Chavez-DeRemer and her top aides and family members routinely sent personal messages and requests to young staff members.
Chavez-DeRemer’s husband and father exchanged text messages with young female staff members, according to the newspaper. Some of the staffers were instructed by the secretary and her former deputy chief of staff to “pay attention” to her family, people familiar with the investigation told the Times.
Those messages were uncovered as part of a broader investigation of Chavez-DeRemer’s leadership that began after the New York Post reported in January that a complaint filed with the Labor Department’s inspector general accused Chavez-DeRemer of a relationship with the subordinate.
She also faced allegations that she drank alcohol on the job and that she tasked aides to plan official trips for primarily personal reasons.
Late Monday, on her personal X account, Chavez-DeRemer posted, “The allegations against me, my family, and my team have been peddled by high-ranked deep state actors who have been coordinating with the one-sided news media and continue to undermine President Trump’s mission.”
Both the White House and the Labor Department initially said the reports of wrongdoing were baseless. But the official denials got less full-throated as more allegations emerged — and when Chavez-DeRemer might be out of a job became something of an open question in Washington.
At least four Labor Department officials have already been forced from their jobs as the investigation progressed, including Chavez-DeRemer’s former chief of staff and deputy chief of staff, as well as a member of her security detail, with whom she was accused of having the affair, The New York Times reported.
“I think the secretary demonstrated a lot of wisdom in resigning,” Sen. John Kennedy, R-La., said Monday after her departure was made public.
She enjoyed union support — rare for a Republican
Confirmed to Trump’s Cabinet on a 67-32 vote in March 2025, Chavez-DeRemer is a former House GOP lawmaker who had represented a swing district in Oregon. She enjoyed unusual support from unions as a Republican but lost reelection in November 2024.
In her single term in Congress, Chavez-DeRemer backed legislation that would make it easier to unionize on a federal level, as well as a separate bill aimed at protecting Social Security benefits for public-sector employees.
Some prominent labor unions, including the International Brotherhood of Teamsters, backed Chavez-DeRemer, who is a daughter of a Teamster, for Labor Secretary. Trump’s decision to pick her was viewed by some political observers as a way to appeal to voters who are members of or affiliated with labor organizations.
But other powerful labor leaders were skeptical when she was tapped for the job, unconvinced that Chavez-DeRemer would pursue a union-friendly agenda as a part of the incoming GOP administration. In her Senate confirmation hearing, some senators questioned whether she would be able to uphold that reputation in an administration that fired thousands of federal employees.
She was a key figure in Trump’s deregulatory push
Aside from reports of wrongdoing in recent months, Chavez-DeRemer had been one of Trump’s more lower-profile Cabinet picks, but took key steps to advance the administration’s deregulatory agenda during her tenure.
For instance, the Labor Department last year moved to rewrite or repeal more than 60 workplace regulations it saw as obsolete. The rollbacks included minimum wage requirements for home health care workers and people with disabilities, and rules governing exposure to harmful substances and safety procedures at mines. The effort drew condemnation from union leaders and workplace safety experts.
The proposed changes also included eliminating a requirement that employers provide adequate lighting for construction sites and seat belts for agriculture workers in most employer-provided transportation.
During Chavez-DeRemer’s tenure, the Trump administration canceled millions of dollars in international grants that a Labor Department division administered to combat child labor and slave labor around the worldending their work that had helped reduce the number of child laborers worldwide by 78 million over the last two decades.
In her statement Monday, Chavez-DeRemer said, “While my time serving in the Administration comes to a conclusion, it doesn’t mean I will stop fighting for American workers.”
The Labor Department has a broad mandate as it relates to the U.S. workforce, including reporting the U.S. unemployment rate, regulating workplace health and safety standards, investigating minimum wage, child labor and overtime pay disputes, and applying laws on union organizing and unlawful terminations.
___
Associated Press writers Steven Sloan and Will Weissert in Washington and Cathy Bussewitz in New York contributed to this report.
The Dictatorship
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The Dictatorship
GOP’s Mills faces expulsion effort launched by one of his Republican colleagues
Republican Rep. Cory Mills of Florida was already dealing with multiple, overlapping scandals when a judge issued a restraining order against the congressman last fall after one of his ex-girlfriends accused him of threatening and harassing her. Soon after, Mills found that even some of his allies were keeping him at arm’s length.
In December, Rep. Byron Donalds, a fellow Florida Republican, conceded“The allegations against Cory, to me, are very troubling. I’m concerned about him. I hope he gets his stuff worked out and cleaned up, but it has to go through ethics [the Ethics Committee]. And he has to, you know, basically do that hard work to clear his name, if it can be cleared.”
Donalds, a leading gubernatorial candidate in Florida, had previously suggested he saw Mills as a possible running mate, making the comments that much more potent.
It didn’t do Mills any favors when The Washington Post published a new report a few days ago highlighting body camera footage that showed police officers in Washington, D.C., who were prepared to arrest the GOP congressman after a woman accused him of assault last year, before a lieutenant ultimately ordered them not to when she changed her account. (Mills refused to comment, except to say that the woman’s initial claim was “patently false.”)
Two days after the Post’s report reached the public, one of Mills’ Republican colleagues announced an effort to kick the congressman out of office. NBC News reported:
Rep. Nancy Mace, R-S.C., introduced a resolution Monday to expel Rep. Cory Mills, R-Fla., from Congress over accusations that include sexual misconduct.
Mills is being investigated by the House Ethics Committee in connection with allegations of ‘sexual misconduct and/or dating violence’ and campaign finance violations. He has denied any wrongdoing.
“The swamp has protected Cory Mills for far too long and we are done letting it slide,” Mace said in a statement. “We tried to censure him and strip him from his committee assignments. Both parties blocked it, but we are not backing down.”
By way of social media, the Floridian expressed confidence that he’d prevail if Mace’s resolution reached the floor, encouraging the South Carolinian to “call the vote forward.”
Time will tell whether the expulsion vote actually happens, but in the meantime, after NOTUS reported that Mills intends to respond with an expulsion resolution of his own targeting Mace, the congresswoman wrote online“Cory Mills lied about his military service, has been accused of beating women, has a restraining order against him, and has allegedly been stuffing his own pockets with federal contracts while sitting in Congress. As a survivor, I will always stand up and right the wrongs of others. He is only coming after me because he knows he’s next.”
It’s not often that Americans see members of Congress launch dueling efforts to kick each other out of office, but this is proving to be an unusually awful term.
Indeed, amid growing GOP anxieties about the upcoming midterm elections, there’s fresh evidence that the House Republican conference is both divided and unraveling.
Steve Benen is a producer for “The Rachel Maddow Show,” the editor of MaddowBlog and an MS NOW political contributor. He’s also the bestselling author of “Ministry of Truth: Democracy, Reality, and the Republicans’ War on the Recent Past.”
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